The Caribbean Maritime Transportation Sector: Achieving Sustainability Through Efficiency
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The Centre for International Governance Innovation THE CARIBBEAN PAPERS A Project on Caribbean Economic Governance The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency Fritz H. Pinnock and Ibrahim A. Ajagunna Caribbean Paper No. 13 March 2012 Addressing International Governance Challenges THE CARIBBEAN PAPERS Acknowledgements About the Caribbean Economic The authors would like to thank and acknowledge Governance Project Indianna Minto-Coy for her attention to detail and diligence in editing the first draft of the manuscript. This project convened researchers and We are also grateful to the following persons at CIGI, leaders within the private and public sectors whose suggestions and reviews molded this paper: Daniel to examine and provide substantive answers Schwanen, Shannon Feldman, Zachary Osbourne and and policy prescriptions to current economic others that we are unable to mention here. governance challenges facing the Caribbean region. The papers were initially presented at We would like to thank the following industry executives CIGI workshops, where the authors benefited from the various ports in the Caribbean for their from extensive comments and discussion on contribution and efforts in providing needed data for the their work. This series presents and discusses paper: Everton Walters, CEO, Barbados Port Inc. (retired); policy issues pertaining to trade, investment, Glen Roache, Quality Manager, Barbados Port Inc.; Vincent human capital, the fiscal outlook, public sector Victor O’Neal, Managing Director, BVI Ports Authority; management practices and other issues relevant Harry Maragh, CEO, Lannaman and Morris Shipping to the Caribbean region’s economic future. Company; Grantley Stephenson, CEO, Kingston Wharves Limited; Sylvanus Davis, Assistant General Manager, Port of St. Lucia; Agatha Dublin, General Manger, Antigua and Barbuda Ports Authority; and Rosina Romeo, St. Marteen Ports Authority. Finally, we would like to thank our families for their understanding. Acronyms and Abbreviations CARICOM Caribbean Community CIGI’s Caribbean Economic Governance Project is directed by Daniel CMI Caribbean Maritime Institute Schwanen. CSA Caribbean Shipping Association The opinions expressed in this report are those of the author and do not G7 Group of Seven necessarily reflect the views of The Centre for International Governance IMO International Maritime Organization Innovation, its Board of Directors or Board of Governors, or the Government of Ontario. JIT just-in-time KCT Kingston Container Terminal KWL Kingston Wharves Limited LSCI Liner Shipping Connectivity Index CIGI gratefully acknowledges the Government of Ontario’s contribution to this project. MARPOL 73/78 International Convention on the Prevention of Pollution from Ships PAJ Port Authority of Jamaica SIDS small island developing states SLASPA St. Lucia Air and Sea Ports Authority Copyright © 2012 The Centre for International Governance Innovation. This work was carried out with the support of The Centre for International SOLAS 74/78 International Convention on the Safety Governance Innovation (CIGI), Waterloo, Ontario, Canada (www.cigion of Life at Sea line.org). This work is licensed under a Creative Commons Attribution- Non-commercial — No Derivatives License. To view this license, visit TEU twenty-foot equivalent unit (www.creativecommons.org/licenses/by-nc-nd/3.0/). For re-use or distribution, please include this copyright notice. UNCTAD United Nations Conference on Trade and Development ISSN 1915-6421 (Online) 2 | The Caribbean Maritime Transportation Sector: Achieving Sustainability through Efficiency The Centre for International Governance Innovation Summary Introduction The port structure of the Caribbean has been heavily The tourism industry has been embraced as a development influenced by global change over the last 200 years. The tool by many countries in the Caribbean as a result of the historical context — colonialism, piracy and slavery — impending demise of the traditional banana and sugar meant that ports were originally designed to serve colonial industries. The fastest-growing segment of the industry interests. The advent of containerization and globalization is cruise tourism, for which the Caribbean accounts have dramatically changed cargo shipping, while at the for 50 percent of the global market share by vessel same time, cruise tourism has increased significantly — calls and passenger count, but represents less than five the Caribbean accounts for 50 percent of the global market percent of the total global tourism industry revenue. — which means that cargo and cruise ships now compete Cruise ships have now become destination and floating for limited berth space. theme parks, thereby reducing the Caribbean region to a low-value, high-volume destination. This is due The Caribbean approach to the development and reform to the fragmented approach to the development of the of the maritime industry has been fragmented, as the maritime transportation industry in the Caribbean, which region is made up of microstates. As the global shipping is not sustainable in its current form. This unsustainable industry evolved, port infrastructure in the region has not approach to maritime development is the major issue kept pace, and needs to undergo a major overhaul in order that this paper discusses. In many territories, cruise ships to become sustainable. This paper provides an overview compete with cargo vessels for limited berthing space. of the maritime transport industry in the Caribbean, the Throughout the region, there is an understanding that history of both cargo and cruise shipping, and makes nine cruise ships get priority berthing over cargo vessels, policy recommendations that could help the region achieve which have to wait until after cruise ships sail to berth. sustainability and efficiency: take an integrated approach This means cargo vessels have to carry out their load when making large strategic decisions; take a regional and discharge operations after normal working hours, approach to port security; align labour market regulation resulting in massive overtime costs and often-lengthy to global standards; harmonize maritime transport delays. In all cases, these extra charges are passed on to industry legislation; consider the public benefit when local consumers, contributing to the high cost of maritime investing public funds in maritime infrastructure projects; transportation in the Caribbean. Barbados, for example, undertake collective economic, social and environmental has been seriously affected by this dilemma. impact studies; implement the landlord model; recognize that transshipment is not always the correct answer for The modern cruise industry has its roots in the early every port; and acknowledge that regional organizations cargo and passenger industries serving colonial interests should provide services to member governments. in the Caribbean. The birth of the modern cruise industry Author Biographies Fritz Pinnock is the executive director at the Caribbean Ibrahim Ajagunna holds a higher national diploma in Maritime Institute. His experience in the shipping and hospitality management from the Federal Polytechnic Idah, transportation industry spans over two decades. Fritz holds Nigeria, a master of science degree from Sheffield Hallam a Ph.D. in sustainable development from the University of the University, United Kingdom, a post graduate diploma in West Indies. He also holds a master of science degree from education from the University of Technology and a Ph.D. in University of Plymouth, United Kingdom. His consultancy sustainable development from the University of the West services in strategic management have been extended to many Indies. Ibrahim has presented papers at various conferences Caribbean islands, including Jamaica, Barbados, Antigua and seminars, and has also published materials in reputable and Guyana. He has written and presented papers at various international journals and has written book chapters in the areas conferences both within the shipping and transportation of tourism and hospitality. He has management experience industry, and educational institutions. Fritz is an expert in locally and internationally in positions in the tourism and developing and integrating operational and strategic plans, hospitality industries, and at educational institutions. Ibrahim reengineering, cost-cutting control and managerial systems is the immediate past vice president of the Council of Heads of development. Caribbean Hospitality Schools, Jamaica. Fritz H. Pinnock and Ibrahim A. Ajagunna | 3 THE CARIBBEAN PAPERS in the 1960s, however, accounts for the shift from mere General Shifts in the Maritime maritime transportation to the cruise tourism industry. The approach to the development and reform of the Industry maritime transportation industry has been fragmented, and the region has not capitalized on the opportunities The maritime transportation industry has a legacy of to use maritime transportation as a development tool. piracy, slavery and colonialism, catering to small-market The maritime transportation infrastructure throughout needs. The upward movement of world oil prices, the region was designed to facilitate colonial trade. the impact of globalization and containerization have Advancements in technology and skills have today placed all changed the face of the global shipping industry, the Caribbean in catch-up mode, as most reforms have and the Caribbean has been slow to